4. ANALYSIS
4.5 Digital agricultural platform 2: Blockchain in Brazil
The following section will review two additional cases to investigate whether sophisticated technologies in light of Blockchain and Smart Farming may support previous findings or partially change the observations. Particular interest will have an investigation of these technologies and their role in the context of “hyper-transparency”.
[Digital agricultural platform 2] is a digital platform that draws on blockchain technology with a particular focus on the coffee GVC and operates with various coffee GVC actors in Brazil.
The platform particularly aims to enhance traceability, transparency, smallholder inclusion and enables a detailed visualization from farmers’ origin to consumers. This enables consumers to envision the involved processes in the coffee supply to consuming countries (DP2, 2020a,b).
Figure 7: Digital Agricultural Platform 2: Blockchain
Source: Own constellation based on empirical data.
The [Digital agricultural platform 2] incorporates the central platform through which both farmers and consumers are connected through an app (DP2, 2020b). A provider operates the platform by supplying the blockchain-based software solution. Farmers are proclaimed to finally be able to participate in the digital coffee value chain through their app for business and financial transactions. Through the app, the producer can show digital certifications, insert data about his farm, has access to a digital bank and is stated to be in control of their information.
The pendant builds the consumer app through which consumers can visualize farmers’ exact origins as well as the involved processes in the supply from the coffee origin to the consumer.
Consumers are thereby stated to obtain superior experiences, can make a donation to coffee producers and moreover track their contributions (DP2, 2020b).
While the benefits for consumers are well-presented, further investigation is required to assess the value for coffee producers to be part of the digital agricultural platform that anticipates an enhanced smallholder inclusion through Blockchain. Producers are stated to profoundly benefit from being inserted in a digitalized coffee value chain in order to “get along” in the digital age.
Since a high amount of transactions are nowadays digitalized, the producer is outlined to benefit from the digital offerings of the [Digital agricultural platform 2] (DP2: 19.03.20).
Digital agricultural platform
Technology provider
Coffee Producer Consumer
Coffee producers are stated to be in control of their information and would selectively decide what they want to insert into the app. For example, their names and address can be kept private (DP2: 19.03.20). While this view suggests that the producer is in full control of their information, there is a discrepancy between the business model and producers’ free choice of sharing their information. One of the conducted coffee producers in MG has further outlined the consequences for coffee suppliers that do not want to be transparent:
“Here, we have a very large cooperative (..) They have understood the importance of technology, but they didn't like it before. But today there is no way to escape. Either you show everything or you’re out.” (CP3: 12.12.19).
The platform preferably works with producers embedded in cooperatives. For individual producers, it is hard to participate on the platform due to time constraints and lack of resources to teach individual farmers so that the platform needs partners and cooperatives (DP2: 19.03.20).
Even not involved on this platform, one of Brazil’s biggest cooperative announced to implement Blockchain-based solutions (Batista, 2019). Therefore, it has particular significance in this context to assume how this may reshape the demands for a producer to be a supplier in a cooperative in times of Blockchain.
While the benefit for the coffee producer had previously been outlined as participating in the
“digital coffee value chain”, it becomes evident that the digital coffee value chain does not have any information without the participation of the farmer. Especially increasing consumer expectations shape the growing demands for increased transparency. In particular, it is stated that consumers want to know about the origin of the coffee and visualize the people who are involved (DP2: 19.03.20). This is enabled by sophisticated technologies such as Blockchain and executed by digital platforms.
Several “middlemen” are involved in this platform due to a growing need to have detailed information about the farm and the crop (T: 03.02.30). These are outlines to be highly valuable for traders to position themselves vis-à-vis roasters and consumers. Blockchain enhances a new means of traceability through digitized, integrated, and exchanged information. Moreover, traders may obtain information to optimize processes in the coffee value chain (DP2: 19.03.20).
Traders anticipate a digital and unified platform as a “continuation” of certifications such as
“Rainforest Alliance” in which farmers’ information is found in one source. This is particularly needed since all trading houses and exporters in Brazil moreover worked with their “own certifications” (T: 03.02.20). However, coffee exporter in Brazil also see doubts in the digital agricultural platforms that rely on Blockchain. While Blockchain is prominent due to its secure nature, it becomes less secure given its ability to show farmers origin through geotagging:
“(..) In the moment, where I provide their addresses of their farms for example, I provide their home addresses. I ask myself, whether the customer wants the same to happen with their home addresses (..) In the moment I provide addresses, where there are GEO references, then in theory it can get dangerous for a producer.” (E1: 05.02.20).
4.6 Digital agricultural platform 3: Smart Farming in Brazil
The term “Smart Farming” describes the application of information and communication technologies (i.e., Internet of Things, robots, sensors, artificial intelligence) in farm management. A distinct characteristic is the involvement of “big data”, which entails the use of high amounts of information gathered by digital devices, analyzed in real-time and mostly stored on a central information platform (Wolfert et al., 2017). Big data in Smart Farming is anticipated to reshape the organization of farming due to real-time access and tracking of physical items (sensors) placed in the field and connected platforms that control the
“autonomous operation”.
Theoretical discussions outline the impact of these agricultural management evolvements that exceed the field as a unit of analysis and impact the roles of diverse actors and processes along the GVC (Wolfert et al., 2017; Bronson&Knezevic, 2016). Particularly “big data” is capable of establishing predictive farming operations, real-time accuracies, which leads to superior business models driven by data insights (ibid.). Given the capabilities of these technologies, also Smart Farming had widely been in debates around their potential for smallholder inclusion (Kos&Kloppenburg, 2019).
[Digital agricultural platform 3] is a digital platform that was founded in Brazil with a prominent focus on the agri-food production through Smart Farming and includes clients such as farmers, associations, cooperatives and international food companies (DP3: 20.03.20). The platform draws on sensors, accurate satellite data, AI, big data, and analytics for precise farming (DP3: 20.03.20). Coffee producers are stated to benefit from real-time monitoring, simplified farming, enhanced environmental practices, and increased profitability. Crop data is collected through field sensors and satellite images and stored on a central platform or “monitoring systems” to obtain real-time information of the crop without the need for internet or mobile coverage (DP3: 2020a,b).
In light of the growing demand for food production and climate change, the firm argues for data science as an engine to counteract these challenges through the creation of predictive and intelligent models. These models build on farmers’ data that is stated to bring sustainability and transparency to the coffee value chain through real-time monitoring in light of environmental and sustainable practices on the farm (DP3: 2020a,b).
Figure 8: Digital Agricultural Platform 3: Smart Farming
Source: Own constellation based on own empirical data.
The digital agricultural platform works with sensors installed on the field and satellite data in which the overall characteristic entails a real-time data collection without the need to be connected to the internet. These are used on the field to guide the farmer in questions of environmental practices, irrigation or disease and a centralized real-time. The data is necessary for the company to apply its “data science” to build “forecast models” monitoring (DP3:
10.03.20).
Food Industry Digital agricultural
platform
Coffee Producers
Agribusiness Consumers
The [Digital agricultural platform 3] moreover states to enhance transparency in the coffee chain by making use of the farmers’ data:
“(..) We use business intelligence, software and they can aggregate the data and show the food chain like how they use (..) the seeds, how they use the water, supply like fertilizer and other chemicals, so [Digital agricultural platform 3] can deliver some variables, some insights to the food chain (..)” (DP3: 10.03.20)
In Brazil, farmers mostly use these technologies with big crop sizes and enough financial resources. Smart Farming technologies are highly valuable to monitor big farms, for example, through satellite data. The digital platform provider anticipates that farming will become more obligated to use technology in the future (DP3: 10.03.20). While financial barriers delimit smallholders to use sophisticated technologies, farmers’ information could incorporate a new vehicle to obtain technology.
Major roasters have started a partnership with [Digital agricultural platform 3], in which selected smallholders can use Smart Farming technologies without sufficient financial resources. Particularly smallholders that are not used to technologies, women and young farmers are included in the partnership, given that particularly the latter are increasingly leaving their farms to big cities in Brazil (DP3: 10.03.20). Particular interest is outlined to be farmers’
sustainable and environmental practices for commercial roasters. While these technologies are perceived to be quite novel, roasters highlight that agriculture is “about time”. Furthermore,
“genetic manipulation” will become more critical in light of climate change through which drought resisting and adaptable varieties will become more important. Moreover, forecast models and “real-time information” are the “key for agriculture” (R1: 24.01.20).
The data shows that in all cases the advent of digital platforms nourished by sophisticated technologies will reshape the activities and actors’ roles in the coffee GVC in the digital age.
The main findings are summarized in (Table 7):
Table 7: Key findings of the empirical analysis
Key aspect Summary of the empirical analysis Hyper-transparency
Information sharing • Value creation for farmers and value capture and redistribution by coffee GVC actors
• Possible transition to a new prerequisite for coffee producers Coffee producers:
Capacity building • Farmers collaborative knowledge sharing as vehicle for enhanced TC
• TC as prerequisite for upgrading in MG
• Upgrading: product, processes, diversified markets, buyers and income Coffee producers:
Diversified strategy • Growing specialty coffee market and increased accessibility of ICT
• Superior digital platform as vehicle for new and added function
• Interlinked tension: higher value = higher risk for suppliers Coffee producers:
Diversified strategy as risk
• Risks of producing specialty coffee
• Risk to conduct a “direct trade”
Growing specialty
coffee market • Reshapes the roles and activities of all coffee GVC actors
• Specialty roaster introduce a new distribution channel of directly sourced coffee through digital platforms to redistribute coffee to small roasteries New meaning of
certifications in the digital age
• Growing significance of tracking and envisioning environmental and sustainable practices
• Digital platforms incorporate a new means to envision farmers’ information in the digital age
Growing consumer
demands • Demands for detailed information about farmers’ origins
• Growing demands for transparency accompanied with technological advances Coffee production:
Challenges and the role of technology
• Rural depopulation (women and younger farmers) and roasters offering of enhanced technologies
• Climate change: (i) real-time crop monitoring for risk minimization and predictive models (ii) modified coffees for drought resistance coffees New meaning of
predictability • Formation of predictable models through Smart Farming
• Supply chain optimizations through the use of Blockchain Digital platforms • Visualization of information
• Connectedness and interactions between coffee GVC actors through different geographical proximity and virtual relationships
New actors in
coffee GVC • Digital agricultural platforms in which information from producers in all cases forms the base for the business models
GVC& Innovation • Integrated role of learning and innovation for coffee suppliers in GVC
• Integrated role of changing dynamics in GVC governance, TC and upgrading trajectories of coffee producers in Brazil
Lead firms
Governance • Decreased monitoring and control that is shifted to (i) agronomists, traders and farmers (ii) digital devices
• Increased formation of collaborative learning environments and networks Source: Own constellation based on empirical data.